Harper Macleod: Is relationship status important in Scotland?
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Grant Hassan, an Associate in the Family Law team at Harper Macleod, looks at the implications of a couple's relationship status when it comes to dealing with assets if that relationship ends.
As lockdown restrictions ease and the vaccine rollout programme progresses, many couples wish to embrace new opportunities or plan for their futures together. This may entail making important decisions such as moving in together, starting a family, or contributing funds to buy a house with one another. Meanwhile, the housing market has seen an upturn and many family run businesses are also considering diversification options or passing on the reins of a family business or wealth on to the next generation.
More and more couples are opting to embark on relationships as 'cohabitants' rather than getting married or entering civil partnership. For those intending to cohabit or planning for family succession, it is essential to be fully aware that the legal rights available to cohabitants in the event of a separation or death are in stark contrast to those offered to married couples or civil partners.
'Cohabitation' in Scots Law is the term used to describe two people who are living together, 'as if husband and wife' or as 'civil partners'. Cohabitants have far less remedies available to them when a relationship ends by way of separation or death.
Cohabitants' rights
On separation, cohabitants may make a monetary claim against their former partner but they cannot ask for an order transferring ownership of property. This causes difficulty where there is a jointly owned family home. Such claims must be made within 12 months of the date of separation, failing which they would be time barred. For a claim to be justified, it is necessary for the applicant to demonstrate that their partner has gained an economic advantage from their contributions, which, as a result of the separation, has caused them to suffer an economic disadvantage which has not been offset or corrected in any way. Due to the discretionary nature of these claims they are rarely straightforward, nor have certainty of outcome.
In contrast, for married couples or civil partners there is no set period within which a divorce must be sought. There are also a wide variety of orders they can seek to resolve matters other than just a monetary payment. Those include an order for sale or transfer of property, payment of a capital sum, pension sharing orders, an award of ongoing financial support or the useful catch-all of such other orders as are necessary to determine any matter of dispute.
Where a cohabitant dies without a Will, a surviving cohabitant does not have any automatic right to inherit from their estate. They do, however, have a right to make an application to the Court for a claim against the deceased's estate. These claims are subject to a strict time-bar period of six months from the date of death. If the deceased had a Will, but did not include their partner, it is not possible for a claim to be made on death by the survivor. In contrast, married couple/civil partners have automatic legal rights to inherit, irrespective of whether the deceased included them in their Will.
Written Agreements
These are an extremely useful tool to protect wealth or family business interests in the event of separation or death. Often, couples may come into a relationship with differing extents of wealth or may receive assets during a relationship from an inheritance or gift from family members. Agreements can be straightforward, for example dealing with a couple buying a house together jointly, but providing unequal amounts towards a deposit. The Agreement can provide for what should happen to the house on separation. For more complicated situations, a bespoke Agreement can be created. It really depends on the particular circumstances.
Relationship status is important and does have legal consequences. Taking legal advice in anticipation of changes in relationship status or major life events can be invaluable to achieving peace of mind, certainty and security for you and your family.
grant.hassan@harpermacleod.co.uk
